Good day, ladies and gentlemen, and welcome to the Exxaro FD Pre-Close conference call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. If you should need assistance during the call, please signal an operator by pressing star and then zero. Please note that this call is being recorded. I would now like to turn the conference over to Sonwabise Mzinyathi. Please go ahead. Thank you, Operator. Good afternoon, everyone on the line. My name is Sonwabise Mzinyathi, as the operator has said. I'm the Acting Chief Investor Relations and Liaison Officer. Welcome to our FD Pre-Close for the financial year-end 2024. In the room with me, I have the CEO, Dr. Nombasa Tsengwa, as well as her technical assistant, Refilwe Mabapa. I also have our FD, Mr. Riaan Koppeschaar, who is joined by Dashni, our Group Finance Manager. I also have Mervin Govender, who's our Acting Chief Coal Operations Officer, and he's joined from his team by Sharmaine Moolla, who's our Business Analyst. We also have Richard. From From coal, we also have Sakkie Swanepoel, who is our GM for Logistics and Marketing. And we have Richard, and Richard is our Chief Growth Officer. And then we have Leon, Leon Groenewald, who is our MD for Energy, for the energy business. I will now hand over to our FD to just give us a statement. Good afternoon, ladies and gentlemen. It's good to engage with you again. As usual, I'll start off with safety. So safety is very important normally for us at Exxaro. And we're pleased to report that we've gone now 26 months without work-related fatality in the group. And currently, as at the end of October, we're standing on nine lost-time injuries, resulting in an injury frequency rate of 0.06 against our target of 0.05. Also, this period of the year, we call it a critical period. So there's also special attention given in the group on safety matters, and various actions are put at our business units to enforce and strengthen our safety actions in the group. If we look at commodity prices for the year, on the coal side, the API4 price we forecast will average about $105 a ton, free on board for the year. On the iron ore side, the 62% Fe iron ore is $107 a ton CFR. If we look at our numbers for the 12-month period, we forecast that the coal production or product is expected to decrease by about 6%, and coal sales volumes expected to decrease by 2%. On the CapEx front, we expect the Stay-in-Business Capital to be about 11% lower, mainly due to lower spend at the Grootegeluk. As at the end of October, our net cash balance was about R 16 billion, excluding our energy net debt. Remember, we earmarking to retain R 12 billion-R 15 billion for our acquisition strategy. Also, just note that we still need to pay tax as of the end of December. We forecast that the total tax and royalties will amount to about R 1.6 billion. When we look at the energy business, our forecast when we last spoke to you in August was 727 GW of energy. Our latest forecast is pretty much in line with that at 729 GWh of electricity for the year that we will generate. Then also just to update, it's going well on the construction of our 68 MW Lephalale Solar Project. It's still anticipated that we will reach commercial operation of that facility during the first half of 2025. On the disposal side, the ferroalloys, that process is continuing well, and we expect to reach financial close on a transactionally signed purchase agreement during the first quarter of 2025. With that, I'll hand over to the coal team. If you want to give any guidance on the markets or perhaps something you can start off on the markets. Thank you, Riaan. Good afternoon, everybody. If I start off on the domestic market, quite stagnant. Quite a few of the customers under a lot of pressure with inflation pushing up their costs, costs very high, and they are not able to pass on increases to the market. So we see in our domestic market quite a bit of pressure experienced by our customers. Then internationally, I'm not going to spend too much time on what happened in the past period. That I think is adequately articulated in the SENS that has gone out. But if we take a look at where we currently are, I think quite a bit of better demand we're seeing from India currently. We had a really poor three months from India up to about October, largely due to very low steel prices, making the sponge iron industry quite unprofitable, and also very high stock levels combined with the effect of the normal monsoon period. But a bit better in India. Generally, overall, the Indian demand in the seaborne market is quite good this year, and we're quite encouraged by that, fueled by very high energy demand in India. The energy demand is expected to grow 6%-8% over the next three to four years. So there's a good pull in terms of the energy market. Also, Chinese imports were very high this year as a second year to 2023, which I don't think we were expecting. And so despite quite high production by both Australia and Indonesia, we were quite fortunate that both Indian and Chinese demand was quite strong in this year and has helped us on the pricing side. Europe has shown a bit of a strange behavior with the gas prices that went quite high there amidst gas concerns, availability of gas being a concern again there. And we've seen actually that the European Amsterdam-Rotterdam-Antwerp CFR price went quite a bit higher than expected, $222 per ton in this period. We do think that prices will come down there because we think that the potential shortage of gas is already reflected in the price sentiment of the market. South African market was very strangely priced in this period, where we found that the API4 index to which we price was very unattractive for our, let's say, Eastern customers, Middle East, India, Southeast Asia, because one of the issues that I said that was in India with affordability due to the unprofitability of the sponge iron industry, but also what we saw is that South African index kept up, to an extent, by what was happening in Europe with gas, and we found ourselves for quite a while that our index was just not pricing into any Eastern markets, so we had a bit of a challenge there. I think overall we're quite still positive on the global seaborne thermal market. Where previous times we reported that by this time we would have expected to reach peak coal in terms of seaborne thermal coal of a billion tons. It is now by even the most conservative analyst forecasting that up to 2026 we will see a billion tons, and in a conference in India about 10 days ago, there were actually quite a few papers that forecasted that we may see seaborne thermal coal at a one billion mark up to even 2030, so it seems that the demand remains stronger than what is expected by analysts generally, so as Exxaro, we had not a bad time in the markets. We're a fairly small player in the markets, and we I think could push quite a bit on pricing in spite of the challenges that was in the market. Maybe I can stop there, Mervin. Yeah. All right. Maybe I should take over from this. Just on the production of coal, we're seeing in our previous forecast, the one we said last time, we're 1% within that guidance. I think from 2023, we're still about 6% down on thermal coal. Just on the metallurgical coal, we're down about 3% on that one. That's purely because of running into full stockpiles because of the rail rate out of Grootegeluk. I just think on the production side, those were the comments we had. Then we also had the issues of Leeuwpan, where we couldn't supply that coal to market due to quality issues on that one. On the sales product, we saw the thermal coal. That's the same thing, the struggle of taking coal from Grootegeluk by Eskom. That's pushing back that full stockpiles for us. And then obviously on the, you'll see between the domestics and the exports, we obviously cut back on the domestics and push more to exports. And that's purely on the way we balance our railing of coal. Just on the logistics, we saw in the first nine months of the year, we were railing at 42.1 million tons to RBCT. And obviously in the last quarter, we're seeing a good annualized uptake slightly of 50.5 million tons rail rate that we got. Yeah, that's all we're going to comment. The rest is in the pack. Yeah. Thank you. Thank you. Thank you, Riaan, Sakkie, and Mervin. We will now get into the Q&A session. But before we do so, I just want to emphasize that any questions that are related to the Sunday Times articles, they should please be channeled to our chairman. This call is really focused on our FD Pre-Close statements. Any other questions should please be directed to the chairman. Thank you. Operator, please, can you assist us and just remind us on the process of asking questions? Thank you. Ladies and gentlemen, if you would like to ask a question, you're welcome to press star and then one on your touch-tone phone or on the keypad on your screen. You will hear a confirmation tone that you have joined the queue. If you however wish to withdraw your question, you may press star and then two to remove yourself from the question queue. Once again, if you would like to ask a question, please press star and then one. The first question we have is from Brian Morgan of RMB Morgan Stanley. Please go ahead. Hi, good afternoon, guys. Two questions from my side. The reduction in CapEx to R 2.2 billion, how much of that is sort of structural, and how much of it is timing? Some of the CapEx is shifting out into 2025, maybe from 2024. And then the second question is cash balance at the end of May was R 15.3 and now R 16. So net cash generation of R 700 million. It looks a little underwhelming. Could you maybe just give us an idea of what the moving parts were in there? Just take all of them. Yeah. So, Brian, I think on the CapEx, it's mainly timing. It's specifically related to our truck and shovel program at Grootegeluk. So we are still within that ZAR 2.5 billion-ZAR 3 billion guidance that we gave previously. Then on the end of May figure that we quoted previously was also before tax. So we also had to pay tax the end of June. So that is why that number was lower. And dividends. Remember, the other big one is dividends. You also paid out your dividend. Okay. Cool. Thanks, Riaan. Yes. The next question we have is from Shashi Shekhar of Citi. Please go ahead. Hi. Good afternoon. Can you hear me? Yes, we can hear you, Shashi. Yeah. Hi. So I have two questions. The first one is on export. Could you provide the split between railing and trucking? And my second question is on TFR. Just could you provide some brief comment on TFR performance in the second half of this year? Yes. Shashi, thank you for the question. So it's becoming quite difficult to distinguish now export volumes, what's being trucked and what is being railed. Also, a lot of that is actually multimodal logistics operations currently. So the RBCT tons for this year will probably be in the order of five million tons, of which all is railed into RBCT, but some of the coal is even being trucked to sidings to be put on trains. So even there you have multimodal. And then our export channels through the alternative ports, some is trucked and some are multimodal. But obviously the bulk of the alternative ports, which then is about 1.8 million tons being forecasted, is to a large extent being trucked. But as I said, it is not trucked only. If I then can go to the rail performance of TFR, after quite a poor first half, we've actually seen from the shutdown that we had in July that there's definitely an improvement. I think also since the publishing of the infrastructure assessment report, there was quite a nice focus on what should be tackled first, which really assisted in the process from an infrastructure maintenance perspective. We've seen that till the end of October, we're about 50.5 on an annualized basis. If things continue like it is now, we do expect that number to go up towards the end of the calendar year. TFR is still aiming for 60 million tons annualized in their financial year, which ends in March of next year, which we think is highly unlikely, but definitely a nice improvement. For the past four to six weeks, probably we've seen a consistent performance between, let's say, 52 and 57 million tons, with probably an average for the past four, five weeks of close to 54 million tons. I've not calculated the number, so please don't quote me. But definitely an improvement on that front. Nothing to add, Mervin? No. Nothing to add. Okay. Thank you. Next question, Operator. The next question we have is from Mpumelelo Mthembu of Absa Capital. Please go ahead. Thank you. Can you hear me? Yes, we can. Okay. My first question is with regards to Maputo. Have you guys faced any challenges with that alternative channel? And then my second question, in terms of your cash cost, do you expect it to be lower than the first half? And is distribution costs still a key factor in that? And then in terms of your thermal prices, what's the outlook you guys are seeing, noting that you said you're expecting $105 to average this year? So what's your expectation for 2025? And maybe the last one, in terms of Black Mountain, is it still a key part of your asset portfolio, noting that selling the ferroalloys? Thank you. Okay. I want to start on my side. Mpumelelo, thank you for the questions. So if I can start, I don't necessarily have them in the order that you mentioned. Thermal coal prices, we hope it's going to stay around $ 110 per ton. I see the latest analysis by Wood Mackenzie says there are not many factors that we should expect to push it higher. There are, however, two upsides to the pricing view. One is, as much as La Niña was downgraded recently, if we do see that comes through stronger, then we may see supply-side disruptions in Australia and Indonesia, which normally gives quite a price spike in this period of the year. Then also, I think currently in price forecast, it's quite a bit discounted that the northern hemisphere will not experience a cold winter. So of course, if that changes, then it may impact pricing. On Maputo, I think we've done quite well. We have not lost a single vessel out of Maputo due to all the disruptions. We had quite a few business continuity actions that we've put in place to ensure trucking continues from our mines to intermodal stockpiles. And from there, then with the various modes of logistics to the port. But we currently are not forecasting any vessel to be lost due to that. I must say we have really very, very good service and cooperation with the operator on that side, being Grindrod, in the port to really go out of their way to assist us to work around the challenges. Logistics costs, definitely in terms of the alternative ports, remain a challenge. So we are working very hard towards a more optimal logistics mode there to eventually get most of the coal onto rail. But towards in that journey, we definitely still experience very high logistics costs. Even although saying that we're at ease that the coal that we are exporting is definitely value creative to our business. So yes, in spite of high logistics costs, we are still happy to move the export tons. Just coming back to the unit cost thing, so that will be largely dependent on, as we said last time, the Eskom offtake. So at this point in time, I don't think we're going to venture into a number on what the unit cost for the second half will be. Black Mountain, you'll recall that we did say it is a non-core asset. So I think it remains a non-core asset. At this point in time, we're not running any sales process on the asset. All right. Thank you. Operator, next question, please. The next question we have is from Lisa Steyn of News24. Please go ahead. Hi, there. This question. Hey, Lisa. How are you? Good. Thank you. I just. Yes. Yeah. I I wanted to. To the FD Pre-Close specifically? Yes. I believe so. Yes. Thank you. You may go ahead. I would like to find out expectations around Eskom offtake. I mean, we've seen a huge improvement in plant performance. Is there limited upside that Exxaro can experience from improved plant performance at Eskom, even if it were to improve into next year? Thanks. Yeah. I think, Lisa, you must understand that the problem we're having is down at Grootegeluk in Lephalale, and it's based purely on the units that they're operating at Eskom, and I think one of the units is obviously still on maintenance and extended maintenance that's causing the problem with the offtake. Once that unit comes in, we should be able to see that coal go over the belt later on. Okay. Thank you. Thanks, Lisa. Operator? The next question we have is from Nkateko Mathonsi of Investec. Please go ahead. Please go ahead, Nkateko. Nkateko, you're on. Nkateko, can you hear us? It seems there's no response from that line. We have a follow-up question from Brian Morgan of RMB Morgan Stanley. Please go ahead. Thanks, guys. Just a question on the railway line in Waterberg. It doesn't sound like it's going very well. We've not seen the same sort of improvements as we are in Mpumalanga down to RBCT. Could you just give us a bit of color on that? Brian, we've actually seen quite an improved performance directly to Grootegeluk in this period. We do have a bit of a disappointing past two weeks. But apart from that, we've actually seen quite a nice improvement in performance directly to Grootegeluk. Not where we want it to be, of course, but definitely an improvement from the previous year. Thanks. Thank you. What's driving the improvement? I think the fact that we have dedicated locomotives on that corridor that is really working on what we call the smalls, the trains, not your big jumbo trains, that is helping. We definitely also see an improvement in security towards that line. And personally, I think TFR is just realizing that actually the future of coal industry is moving in that direction, and it is quite important for them to start to improve on performance towards the Waterberg. That's cool. Thank you. Can I ask on Leeuwpan? You guys said at the half year that you're going to look to get an Eskom contract for that mine. How did that go? Yeah. Yeah. No, Brian. Brian, the problem we had with Eskom, the one at Matla Power Station taking that coal out of Leeuwpan, it was purely a quality issue where Eskom was starting to reject that coal because of the soft content. And that's why we couldn't supply them. Okay. Cool. So what's the way forward on Leeuwpan now then? So I think, Brian, thank you very much. Numbers are speaking. I mean, we've always said that we want to sell every ton of coal from any of our mines where we can derive value. So with the delays that we've received from Leeuwpan, it's very indicative for us that that process may take even longer, and we may not be able to meet the numbers that we wanted to meet. And therefore, we look for alternative markets. One thing that we have not picked up, and I guess early in the year, we'll be able to give you an indication of what Sakkie and the team are finding from the likely markets of Leeuwpan without really being specific, which is inclusive of the domestic market. What has been quite pleasantly surprising in this last few months is to see consistent, even though low number of trains that are picking up the 5-3 material from Leeuwpan. And that 5-3 material would have been the one that would have been dedicated to Eskom. So it's not all that gloom and gloom in as far as supply from that mine. Okay. Cool. Thanks so much. Thank you, Brian. Operator? The next question we have is from Nkateko Mathonsi of Investec. Please go ahead. Good afternoon. Just checking. Can you hear me? We hear you loud and clear, Nkateko. Welcome. Oh, you can. Okay. All right. Thank you so much. And sorry if I'm repeating some of the questions. I got disconnected halfway through. The first question on the tracking, I just want to get an idea of what is the proportion of tracking from the potential 6.6 export volume that you're focusing for this year, which looks very good, but how much of that was actually tracking? And then the lower CapEx at GG, if you can give us a little bit more color and whether we should think about that being rolled forward into the new year. And then also in terms of your net cap position of ZAR 16 billion, I just want to verify this. Should I see it as, when I'm thinking about the potential special dividend, should we see it as ZAR 16 billion less ZAR 1.6 billion of that tax and royalties that was mentioned? Thank you. Start on the tracking. Yeah. Okay. Nkateko, thank you for the questions. You may have missed the question and answer from earlier. So what I explained, it's becoming quite difficult to put a number to how much of our export coal is being railed and how much being trucked. Because part of the coal even going to RBCT, some of that coal, at least for a distance, is being trucked. But in my mind, I would think what you can use as a rule of thumb is that the coal through alternative ports are definitely multimodal, so partly trucked, partly railed. And most of your coal going to RBCT, which of the guided number is more or less 5 million tons, most of that coal will be railed. Then just on the. All right. Thank you. Cash. On the cash On the cash balance, so there will be cash generation the next month or two. But what I just pointed out is, remember, we still need to pay tax the end of December, and that is going to influence the number that informs our ZAR 12 billion-ZAR 15 billion range. So that will be one of the things that the board will consider when we declare our dividend at year-end, just to not forget about tax. And then I think the other question was on. Capex. Capex. CapEx is timing. It's timing. It's not permanent, most of it. Are you covered, Nkateko? I think we have lost her again. So over to you, Operator. Any other questions? We have a follow-up question from Mpumelelo Mthembu of Absa Capital. Please go ahead. Thank you. Can you hear me, Sonwabise? Yes, I can hear you. Just, I guess, two follow-up questions. It's just an update on the growth strategy. And then the second question is with regards to Matla. Do we see improvements from offtake there? If there could be any color on that, thank you. Okay. Yeah. Mpumelelo, I'll take the Matla one. We're seeing very good performance on starting up mine one. So we should see an improvement on the tons going forward. That's on the Matla side, yeah? And I think Matla is almost done very well this year in servicing its own rate that we're given to them. So they're really on the green as we speak. And I think what is important to notice here is the fact that Eskom has invested a lot of billions into that mine one shaft, and they're really pestering us to start seeing their first coal. And that's what the team is really focusing on. And hopefully, we will see the flow of first coal coming out of that mine before the end of the year, maybe a little bit, but surely in the first half. Hi, Mpumelelo. It's Richard here on the growth side. So we continue to have active engagements on a number of well-advanced projects supporting the strategy. However, we're not always in control of the timelines. Suffice to say, we're making good progress and remain optimistic on the growth strategy, specifically in the commodities mentioned by the CEO recently. Thank you. Any other questions, Operator? At this time, we have no other questions on the lines. Thank you. CEO, any closing remarks? No, thank you very much for attending today's FD pre-close. And as you have heard, obviously, we have a few challenges. And the one that sticks out is around Leeuwpan. We know Leeuwpan has really been struggling from a cost perspective. And we've migrated to a single pit. And we hope that we can see stability coming out of that pit. And as I've said earlier, I am quite encouraged by what I see in terms of the trains. Even though it's a dribble, it's not what we needed, it actually helps us to deal with the markets and diversity of markets for Leeuwpan. We have engaged at my level with Eskom on this offtake at Matimba and secondly, Medupi, to understand when do we see the full complement of those units starting to burn that coal because our own plans are not always as accurate as we'd like them to be. And if your plans are not accurate, they do impact the operations in terms of having full stockpiles because we have an expectation of an Eskom taking the coal. I've been promised by Dan himself in our interaction we had recently that at least by June next year, we need to see stability. And I don't want to burst their bubble in terms of what they see that happen, but we're really being urging them to take us to the minimum levels of our contract, which is 25 million tons. And we're hoping that we're getting there. In terms of the logistics solution, we want to reiterate what we've been saying, that what we see is not optimal, especially with the rail and, not necessarily just rail and, the trucking of coal that takes us to Maputo, and I know the team is working quite hard at optimizing this route without losing sight of the advantages and the little green shoots we see coming out on the RBCT line. When I talk about green shoots, I'm talking about what was promised within the lower levels of declaration, which is 60 million tons, but we are seeing 50. I think Sakkie mentioned that, but I think that there is a little bit of consistency in some aspects or surprises in terms of seeing some of those trains coming through, and we will continue to optimize the Maputo rail. It's not Maputo at all costs. We'll make sure that this works for us. In terms of what we're looking at during this critical season, we are very focused on safety, really urging all leaders to be visible, demonstrating the standards that we want to see from our people in managing these operations at this time of the year, focusing on the right things, making sure that they observe people in the way they work, and assist people to identify the risk. We're also obsessing right now over the cost containment across all the parts of the organization, including this building, which is our head office, to make sure that we meet the margin halfway because we continuously see the squeeze that is coming with the logistics, and we cannot bank on the price because we don't have any control over. And lastly, from my side to say that, look, it's been a tough year, and I think the teams have really worked quite hard, including Richard's team. Very exciting times to see what they're working with. And we wish them well as well within the team because we know that they're working in earnest. And once again, thank you so much for all of you for keeping us sane, for always asking us the tough questions. And Merry Christmas and have a wonderful festive season to you all. Thank you. Thank you so much. With that, thank you so much for joining us. Goodbye. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.